2014 (8) TMI 505 - AT - Service Tax

Waiver of pre deposit - Denial of CENVAT Credit - outward transportation of goods - Held that - Surprisingly no proceedings were initiated against the appellants on suo motu re-credit by the appellant. That may be probably on the ground that the appellant had originally availed the credit but subsequently debited the same in view of the declaration of law by the Tribunal in the case of Gujarat Ambuja Cement v. CCE 2007 (3) TMI 1 - CESTAT,NEW DELHI . Again became entitled to avail the same in view of the declaration of law by the Larger Bench decision of the Tribunal in the case of ABB Ltd. 2009 (5) TMI 48 - CESTAT, BANGALORE As such, throughout the period when the credit remains suspended on account of having made a debit entry, they were entitled to utilize the credit. The Larger Bench of this Tribunal makes the law clear. As such, during the period, for which the credit remained suspended in fact, the appellant was entitled to utilize the same. If that be so, the question of payment of interest does not arise at all. At this prima facie stage, no reason to direct the applicant/appellant to deposit any amount - Decided in favour of assessee.

Issues:
1. Dispensing with pre-deposit of interest amount confirmed against the appellant.
2. Availing credit of service tax on outward transportation of goods.
3. Reversal and re-credit of accumulated credit based on legal decisions.
4. Confirmation of interest and penalty by Deputy Commissioner.
5. Applicability of Supreme Court judgment in the present case.
6. Entitlement to utilize suspended credit during legal uncertainties.

Analysis:
1. The appellant sought to dispense with the pre-deposit of interest amount confirmed against them. The Tribunal noted that the appellant had availed credit of service tax on outward transportation of goods, which was later reversed based on a legal decision. Subsequently, a Larger Bench decision held that such outward transportation qualifies as an input service, allowing the appellant to re-avail the credit. The Tribunal found that during the period when the credit remained suspended, the appellant was entitled to utilize it. Therefore, the Tribunal allowed the stay petition, stating that there was no reason to direct the appellant to deposit any amount.

2. The appellant had initially availed credit of service tax on outward transportation of goods from the factory to the depot. However, following a Tribunal decision in another case, the appellant reversed the accumulated credit. Subsequently, a Larger Bench decision clarified that outward transportation of goods should be treated as an input service. The appellant then re-availed the credit under intimation to the authorities. The Tribunal considered this background while deciding on the issue of confirming interest and imposing penalties.

3. The Deputy Commissioner had confirmed the interest and imposed penalties under the Cenvat Credit Rules, 2004. On appeal, the Commissioner (Appeals) set aside the penalty but confirmed the interest. The Tribunal analyzed the legal developments and the appellant's actions regarding the credit reversal and re-credit, ultimately leading to the decision to allow the stay petition.

4. The Learned SDR relied on a Supreme Court judgment, which was found not applicable to the facts of the present case. The Tribunal observed that the credit was neither wrongly taken nor wrongly utilized by the appellant, as the legal landscape regarding the treatment of outward transportation as an input service had evolved over time.

5. The Tribunal noted that no proceedings were initiated against the appellant regarding the re-credit taken by them. This was possibly due to the appellant's initial availing and subsequent reversal of the credit based on legal interpretations. The Tribunal emphasized that the appellant was entitled to utilize the suspended credit during the period when it was in question, as clarified by the Larger Bench decision.

6. In conclusion, the Tribunal allowed the stay petition, emphasizing that the appellant was entitled to utilize the credit during the period when it remained suspended due to legal uncertainties. The decision was based on the clarification provided by the Larger Bench of the Tribunal, indicating that there was no basis for directing the appellant to deposit any amount.

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